In Reorganization plan, archdiocese offers $65 million for abuse victim remuneration

| May 26, 2016 | 4 Comments
Archbishop Bernard Hebda speaks to media May 26 following the filling of a plan for Reorganization by the Archdiocese of St. Paul and Minneapolis. Dave Hrbacek/The Catholic Spirit

Archbishop Bernard Hebda speaks to media May 26 following the filling of a plan for Reorganization by the Archdiocese of St. Paul and Minneapolis. Dave Hrbacek/The Catholic Spirit

Sixteen months after entering Reorganization under Chapter 11 of the U.S. Bankruptcy Code, the Archdiocese of St. Paul and Minneapolis filed a plan for Reorganization May 26. The plan identifies more than $65 million in assets the archdiocese anticipates will be available to compensate victims of clergy sexual abuse, with the potential for that amount to grow.

The plan outlines specific sources for funds available for victim remuneration, including at least $8.7 million from the sale of archdiocesan properties, including three chancery buildings on Cathedral Hill, as well as more than $33 million from insurance settlements. It establishes a trust for victim remuneration funds, with a court-approved allocation protocol.

The plan also includes settlements from parish insurers of approximately $13.7 million with the potential for future settlements from archdiocesan insurers that are not currently entering into agreements with the archdiocese. The archdiocese is seeking to transfer the rights of recovery for those policies to the trustee of the trust for victims.

“We filed our plan today — at 16 months — because victims/survivors cannot be compensated until a plan for reorganization is finalized and approved,” Archbishop Bernard Hebda said during a press conference May 26. “The longer the process lasts, more money is spent on attorneys’ fees and bankruptcy expenses, and, in turn, less money is available for victims/survivors. . . . We are submitting our plan now in the hope of compensating victims/survivors and promoting healing sooner rather than later.”

The plan filing came a day after decades-old sexual abuse claims could be filed under the Minnesota Child Victims Act, which the State Legislature passed in 2013. The law lifted for three years the statute of limitations for child sexual abuse civil suits.

The lifting of the statute ushered in a wave of claims against clergy who had been or were serving in the archdiocese, leading the archdiocese to enter bankruptcy in January 2015 as a means to distribute assets equitably and fairly among victims. By a court-established claim deadline in August 2015, more than 400 claims of clergy sexual abuse had been filed against the archdiocese.

In a May 25 statement, the Minnesota bishops apologized for the pain suffered by victims of clergy sex abuse and their families, and thanked them for coming forward.

“While we cannot say or do anything to return the innocence of youth that was stolen, we will work to restore broken relationships with family, friends and loved ones and heal the pain caused to so many,” they said, also promising to continue to work to create safe environments for children, immediately report every allegation, and employ “stringent” hiring practices.

Moving Reorganization into final phase

In entering Reorganization, the archdiocese sought to continue the essential ministries and mission of the local Church, leaders said at the time.

The plan does not distribute some assets the archdiocese owns but says are essential for its core mission and cannot be considered salable assets with market value. They include property occupied by the Cathedral of St. Paul in St. Paul, Totino-Grace High School in Fridley, Benilde-St. Margaret’s School in St. Louis Park and DeLaSalle High School in Minneapolis.

The plan also asks for a resolution of 323 lawsuits against 97 parishes in the archdiocese by means of a channeling injunction. It also establishes a counseling fund for victims with an initial $500,000 contribution from the archdiocese, and it incorporates protocols from a civil settlement between the archdiocese and the Ramsey County Attorney designed to ensure the archdiocese is adhering to best practices in child abuse prevention.

For implementation, the archdiocese’s plan requires approval from U.S. Bankruptcy Court Judge Robert Kressel, who is expected to look for agreement from attorneys from the Unsecured Creditors Committee that the plan meets the needs of both victims and the archdiocese.

The plan is “moving us into what we hope is the final phase of the Reorganization proceedings,” said Joseph Kueppers, the archdiocese’s chancellor for civil affairs. “We need to move out of this bankruptcy process so we can move ahead with the mission of the Catholic Church, which is making the name of Jesus Christ known and loved.”

The timeline of the next phase of Reorganization is unknown, Kueppers said, but he expects a May 31 court hearing to provide direction.

Speaking May 26 on the lawn of the archbishop’s Summit Avenue residence, which is among properties the archdiocese has sold and is temporarily leasing, Archbishop Hebda acknowledged that the plan may be modified before it is approved.

“While we believe this plan is fair, we also know that some well-intentioned people may raise objections,” he said. “Reorganizations sometimes involve modifying an initial plan. We are committed to working earnestly with everyone involved to find a fair, just and timely resolution.”

Assets in question

Prior to the plan filing, victims’ attorneys called into question whether the archdiocese was making available all potential sources for victim compensation. In a motion filed with the court May 23, attorney Robert Kugler, who represents sexual abuse victims in the archdiocese’s bankruptcy proceedings, argued that the archdiocese should consider parishes and foundations as fund sources, despite their separate incorporation.

Kugler alleges that in recent decades the archdiocese separated itself from more than $1 billion in assets through the separate incorporation of parishes and the establishment of separate entities for donations, such as the Catholic Community Foundation and the Catholic Finance Corporation.

In a May 24 press conference, Jeff Anderson, a St. Paul attorney representing 378 sexual abuse victims with claims against the archdiocese, said these additional assets could total $1.7 billion.

Speaking May 24 at a separate press conference responding to the accusations, Archbishop Hebda said the archdiocese is carefully reviewing the motion and will count on the court to properly evaluate it.

“Let me be extremely clear: The archdiocese has disclosed all of its assets and followed all of the rules set forth by the court and all directives from the judge,” he said.

At the May 26 press conference, Archbishop Hebda added that he found the accusations “surprising and confusing, particularly since those same lawyers were well aware of all that we have been doing in mediation to maximize the assets available to those who have been harmed.”

He said that he has been advised that confiscating the assets of separately incorporated entities for victim remuneration “is simply contrary to law.”

“In the event that our parishes, Catholic schools and other Catholic groups would wrongly be forced to make their assets available to those who have claims against the archdiocese, there is no question that the impact would be felt in our community by all those who benefit from the ongoing charitable work of parishes, Catholic schools and other Catholic groups throughout the 12 counties that comprise the Archdiocese of St. Paul and Minneapolis,” he said.

“We truly want to do what is right. We have people praying all over the diocese that we might act correctly and take the high road,” he added. “We unfortunately will never be able to undo the harm caused, but we have been striving to compensate those harmed, to help in any way we can with their healing, and to create and maintain safe environments for all children.”


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  • Guy McClung

    Whose money? If it is from the faithful in the pews, then they were defrauded out of it by pastors and bishops who should be held civilly and personally liable for every penny. No one gave one dime to further pederasty [majority of cases] or pedophilia. The money was taken with the implied promise it would be used to perform the actions of the Sermon On The Mount. Those paying out the faithfuls’ money [ who made the promises and are now paying out the money to priests’ and bishops’ victims] have defrauded the faithful. Doesn’t canon law prevent money collected being spent for a purpose other than that for which it was collected? If you don’t have enough irony, wait a year or two: this and other dioceses will have a”capital campaign” to meet “the needs of the needy and to live out the “preferential option for the poor,” not to mention money to Catholic Relief Services for support of those entites who support contraception and provide condoms to the Third World.

    • Charles C.

      Good call, Guy. You seem to be saying that no money should be spent which was donated by parishioners, but should come from the earnings of priests and bishops.

      Ok, then, let’s have the Archdiocese rescind all settlement agreements because, as you point out, that would be fraud. All money to the victims will come out of the earnings of the bishops and priests of the Archdiocese, whether they knew about it or not.

      Do you have any idea what a small pot of money that would leave the victims? Or, if you do, maybe you don’t care? And just where do you think the priests’ salaries come from if not from the parishioners?

      Then when the priests have no money to eat or find housing, how are you with the taxpayers picking up the bill?

  • Danno

    Archbishop Hebda and the Archdiocese of MSP are about to squander the last best opportunity for true healing for both the victims and the church.

    When viewing the archdiocese’ reorganization plan one will notice it is missing true Christian values. Values that church leaders preach about but refuse to live by.

    Hebda, like most bishops continue to use the same mindset of self protection, secrecy and placing asset protection above wounded people that got them into this mess to begin with.

    Everyone knows that the archdiocese truly controls the parishes, cemeteries and everything else. Saying otherwise is just a lie and slimy legal maneuver.

    Assets of this archdiocese are over a billion dollars, why are they even allowed in bankruptcy court? They choose this moral low ground to hammer down their cost for compensating hundreds whose lives were shattered by clergy rape and molestation. Also to prevent the entire truth about how leaders handled dangerous sexual predators, revealing who those predators are with details of their criminal acts.

    Church leaders continue in attempts to distract us with eloquent apologies proclaiming how sorry that they are. They tell us things have changed and promise complete transparency. They promise fair treatment, healing and justice for victims.

    They then immediately prove that their apologies are just hollow platitudes that show us all just how sorry that they are not.

    They hire high priced lawyers and image consultants to draft those apologies and then spend millions to fight the release of the documents that show how many sexual offenders they have protected and who they are. They show no care for your children by keeping these dangerous secrets. They preach Catholic values but refuse to use them the minute that they pass through courthouse doors. In court they will use any and every callous legal strategy and hide behind religious freedom and SOL.

    They know full well that they are causing much unnecessary pain and re injury to victims and they just do not care.

    I know this first hand because I am a Milwaukee victim who answered the call from Archbishop Listecki to come forward for healing and resolution. He said that he filed bankruptcy to fairly compensate victims. He promised to be fair and said nothing would prevent him from moving toward healing and resolution with those so horribly
    harmed……………. He then spent millions trying to throw out every single victims claim. He dragged this misery out for five years to load the pockets of is friend and lead counsel Francis LoCoco. The 2 federal judges were devout Catholics and the only local paper has a cozy relationship with the Milwaukee Archdiocese and would not cover their ruthless tactics. Only 1 priest publicly supported the victims and the
    parishioners were mostly silent.

    The victims of the Milwaukee Archdiocese have been completely abandoned and emotionally shredded.

    I cannot put in words the pain caused by the ruthless actions of the Milwaukee Archdiocese bankruptcy. I am truly a broken man. I have lost all hope for healing. The court approved therapy that will be managed by the Archdiocese using their therapists and the Archdiocese can decide when we are healed and end therapy. They have access to our sensitive and private therapy documents and notes. It is like going back to the bully that broke your arm to have it cast.

    Catholics of MSP please do not allow the ruthless treatment of victims to continue.

    These victims have been hurt and betrayed by the priest who molested them, by the bishops who put them in harms way, and by the churches harmful self protective response to the sexual assault of children.

    Now this archdiocese is betraying the victims again…… please do not let the archdiocese treat these victims like the Milwaukee victims. In Milwaukee parishioners sat quietly on the sidelines watching the ruthless assault on victims in a bankruptcy that was void of any Christian values.

    Please call the archdiocese and tell them to stop their assault on victims.
    Victims truly need, to be reached out to with loving concern.
    We want the full truth released and to be treated with fairness and dignity.

    These victims have been hurt and betrayed again and again for way too long.

    This is the last opportunity available for true healing. Please do not allow Archbishop Hebda to squander it.

    • Charles C.

      OK, tell me, what are the assets that the Archdiocese owns which are worth over a billion dollars? Are you asking the Archdiocese to order every parish to sell their churches and give the money to a victim’s fund?

      If so, you’ve got a fight with Guy McClung, whose post is above yours. He’d say it’s fraud against the parishioners.

      I’m not prepared to discuss, on a rational basis, such issues with someone who is broken and consumed by emotion, that’s not my gift.

      I think about the mother who lost her young child to a drunk driver.

      “He killed my only child, he’ll never grow up. I want a million dollars, I want everything he has or will ever have, I want 100 million dollars. And I want that much from the bar he bought the drinks, and the company that made the alcohol, and the car company that hasn’t installed breathalyzer interlocks. He was my only child, and I need healing.”

      At some point the judge will have to tell her, in the most sensitive and compassionate way, “Ain’t gonna happen, lady.”

      And the full truth? How will you ever know if you have gotten it? You won’t ever know for sure. And do you want the full truth in your case, or would you be satisfied if each individual victim learned the full truth about their particular case?

      How much of this is about healing, and how much about revenge?